M A R K E T B E AT Office Q4 2019

Office markets hit an all-time high; momentum to sustain in 2020 Hyderabad office market hit an all-time high in 2019, with all indicators surpassing previous peaks. Gross leasing activity was recorded at 10.7 msf, higher by 13.0% y-o-y. Net absorption has improved by 67% y-o-y to touch 10.0 msf for the full year, driven by large pre-leases from 2018 becoming operational during the year. For Q4, gross space take-up was 5.8 msf with several tenants like , HCL, , Legato and ZF 10.7 msf GROSS LEASING (2019) actively pre-leasing large spaces to the tune of 4.2 msf in upcoming projects across and . Net absorption in Q4 was 1.1 msf. Unlike previous quarters, Captive centres dominated larger leases during the quarter, accounting for nearly 52% of the transacted space. IT-BPM remains a leading demand driver with a 32% share in Q4 (50% for the full year). Demand for flexible workspaces has grown substantially amidst tight vacancies. As such, flexible workspace operators have leased 2.1 msf. (including grade B) during the year, a 3X rise on an annual basis. NEW COMPLETIONS (2019) 10.1 msf Meanwhile, office stock in the city has grown by nearly 21% y-o-y with new completions of about 10.0 msf during the year (1.1 msf in Q4). Further strengthening the momentum, nearly 1/3rd of the upcoming supply in 2020 is already pre-leased even as several occupiers are actively exploring other space options. 5.80 msf PRE-LEASING ACTIVITY (2019) Gachibowli overtakes Madhapur, office market actively spreading across ORR Gachibowli out-ranked Madhapur in Q4, with nearly 4 times the space take-up in the latter, driven by large expansionary demand coupled with the rental arbitrage and prevailing tight vacancies in Madhapur. For the full year, office demand in Gachibowli was at 6.4 msf and has surpassed Madhapur by 57%. In terms of space leased by larger deals (>100,000 sf) as well, Gachibowli led Madhapur by 10X during the quarter, an MARKET INDICATORS OVERALL indication that occupiers are no longer bound by distance and social infrastructure. With the core financial district and the immediate surroundings Q4 2019 filling up fast, office market is rapidly expanding along the ORR towards and – . Tenants are also actively considering such space options given a cost arbitrage of up to 20-25% as compared to Madhapur and Gachibowli. Nearly 25% of the future supply 12 month Q4 2018 Q4 2019 (until 2022) in these upcoming submarkets is already pre-leased. Forecast

Overall Tight vacancies and strong demand fuels rental growth, rents to go up further in 2020 6.4% 5.5% Vacancy Overall vacancy at the city level has further tightened to 5.5% during Q4, down by 28 basis points q-o-q. Madhapur’s vacancy remained extremely Weighted Average low at 2% levels but Gachibowli witnessed a steeper drop of about 230 basis points during the quarter. With the robust demand and tight Net Asking Rents 62.0 vacancies, rentals in Madhapur and Gachibowli rose by 5.2% and 4.5% q-o-q. Overall rents at the city level have increased by about 3% during the SBD 56.7 (INR/sf/month) quarter, while the annual growth is steeper at 9.3% on an overall basis. Rents are likely to inch up further in 2020 driven up by quality project completions, tight vacancies and strong demand momentum. YTD Net 6,010,673 10,010,158 Absorption (sf) NET ABSORPTION & NEW SUPPLY OVERALL VACANCY & WEIGHTED AVERAGE ASKING RENT 16.0 80.0 12.00% 14.0 10.00% 60.0 12.0 8.00% 10.0 40.0 6.00% 8.0 4.00% 6.0 20.0 4.0 2.00% 2.0 0.0 0.00% 0.0 2016 2017 2018 2019 2020F NET ABSORPTION (MSF) NEW SUPPLY (MSF) WEIGHTED AVERAGE RENTS (INR/SF/MONTH) OVERALL VACANCY(%) M A R K E T B E AT HYDERABAD Office Q4 2019

MARKET STATISTICS

GRADE A WTD. AVG. RENT* YTD GROSS PLANNED & UNDER INVENTORY YTD CONSTRUCTION YTD NET SUBMARKET VACANCY RATE (%) LEASING CONSTRUCTION (SF) COMPLETIONS (SF) ABSORPTION (SF) ACTIVITY# (SF) (SF)^ INR/SF/MO US$/SF/YR EUR/SF/YR

Madhapur 41,588,351 2.3% 4,088,116 16,218,931 7,061,403 7,270,797 78.04 13.14 11.87

Gachibowli 13,269,193 10.8% 6,426,493 19,102,598 1,974,000 1,879,451 61.10 10.29 9.29

Peripheral East 2,048,000 31.5% 95,000 0 700,000 160,000 38.63 6.51 5.87

TOTAL## 58,575,985 5.5% 10,740,065 36,367,149 10,079,023 10,010,158 62.00 10.44 9.43

The report highlights Grade A details only. Certain indicators are historically corrected by addition / deletion of older / refurbished projects as per grade A classification and accounting for changes in built-up / leasable area besides adjusting tenant leases to reflect accurate market conditions. #YTD gross leasing activity includes pre commitments and term renewals ^ Includes planned & under construction projects until 2022 Net absorption refers to the incremental new space take-up *Weighted average asking rental rates for vacant spaces that provide core facility, high-side air conditioning and 100% power back up ## Totals include a smaller portion of grade A properties outside the above-mentioned submarkets. IT-BPM – Information Technology – Business Process Management, BFSI - Banking, Financial services and Insurance Key to submarkets: Madhapur includes Madhapur, , ; Gachibowli includes Gachibowli, , Manikonda Peripheral East includes Pocharam and Uppal; US$ 1 = INR 71.26 € 1 = INR 78.92 Numbers for the fourth quarter are based on market information collected until 20th December 2019

Rohan Sharma KEY LEASE TRANSACTIONS Q4 2019 Director, Research Services PROPERTY SUBMARKET TENANT SF TYPE +91 124 4695555 /[email protected] Laxmi Infobahn Tower - 5 Suburban (Gachibowli) Cognizant 900,000 Pre-commitment Kapil Kanala Associate Director, Research Services Salarpuria Sattva Knowledge Capital Block 2 Suburban (Gachibowli) Google 612,500 Pre-commitment +91 40 40405555 /[email protected] Laxmi Infobahn Tower – 9 Suburban (Gachibowli) Legato 325,000 Pre-commitment cushmanwakefield.com Q-City Suburban (Gachibowli) Vodafone 85,300 Fresh lease A CUSHMAN & WAKEFIELD RESEARCH PUBLICATION SIGNIFICANT PROJECTS PLANNED AND UNDER CONSTRUCTION Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for PROPERTY SUBMARKET MAJOR TENANT SF COMPLETION DATE real estate occupiers and owners. Cushman & Wakefield is KRC Mindspace Building # 12D Suburban (Madhapur) Schneider Electric, Vitech 1,250,000 Q2 2020 among the largest real estate services firms with approximately 51,000 employees in 400 offices and 70 Phoenix Aquila Tower - B Suburban (Gachibowli) UBS, Hyundai Mobis 750,000 Q2 2020 countries. In 2018, the firm had revenue of $8.2 billion across core services of property, facilities and project DivyaSree Orion, Block 3 Suburban (Madhapur) Salesforce, Mindtree 598,930 Q3 2020 management, leasing, capital markets, valuation and other My Home Twitza Suburban (Madhapur) NA 1,180,000 Q3 2020 services. ©2020 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy.